Sunoco Logistics Partners L.P. has acquired the Vitol Group’s Permian Basin crude oil system for approximately $760 million plus working capital. Included in the acquisition are an approximately two million barrel crude oil terminal in Midland, Texas, a crude oil gathering and mainline pipeline system in the Midland Basin, including a significant acreage dedication from an investment grade Permian producer, and crude oil inventories related to Vitol’s crude oil purchasing and marketing business in West Texas. As part of the agreement, Sunoco Logistics Partners L.P. also acquires the remaining 50 percent interest in SunVit Pipeline LLC. SunVit connects the Midland terminal to the Partnership’s Permian Express 2 pipeline, a key takeaway to bring Permian crude oil to multiple markets. The acquisition is expected to close in the fourth quarter of 2016, subject to certain closing conditions and regulatory approval.
In connection with the acquisition of Vitol’s integrated crude oil business in West Texas, Energy Transfer Partners, L.P. and Energy Transfer Equity, L.P., as the owners of Sunoco Partners, LLC, Sunoco Logistics Partners L.P. general partner, have agreed to reduce the incentive distributions Sunoco Partners, LLC receives by a total of $60 million over a two-year period. The reduction will be recognized evenly over eight quarters beginning with the quarterly cash distribution paid for the third quarter 2016.
“We are pleased to announce this strategic crude oil acquisition,” said Michael J. Hennigan, President and Chief Executive Officer for Sunoco Logistics Partners L.P. “The addition of the Vitol system is an excellent synergistic fit to our growing crude platform in the Permian Basin. The Permian Basin is the most prolific of all of the US shale areas with strong growth expectations. The Vitol pipeline assets are located in what we believe are the three best counties in the Midland Basin. Adding a 2 million barrel terminal in Midland is very complimentary to our Permian strategy. ”